Since it acquired the startup platform Heroku in 2010 Salesforce has been growing its ecosystem of innovative companies who are using its suite of Software-as-a-Service (SaaS) tools to reach new customers.
Over the course of Dreamforce - the CRM vendor's huge annual conference last week - Techworld got a flavour for what Salesforce looks for in a startup and how it is looking to build an ecosystem around its Heroku Platform-as-a-Service (PaaS) community and a newly founded incubator.
Frenchman Ludo Ulrich is the man charged with developing Salesforce's startup ecosystem. In his own words, Salesforce for Startups is: “The high scale, global programme, freely available to anyone to discover what Salesforce can bring to that market. Think about us as a platform to build on, and how to give back and include that in the fabric of your company.”
This is separate to the ventures arm of the business. Instead of focusing on strategic investments, Ulrich is charged with giving a community of more than 7,000 startups a platform to build upon and connect them with relevant Salesforce staff and partners.
He then gets to cherry pick the best and brightest for their newly founded incubator down in the tech alley that is the South of Market (SoMa) neighbourhood in downtown San Francisco.
The incubator had its first demo day earlier this year, with the first cohort themed around the wonderfully nebulous term 'platform'.
The next cohort, which will consist of around a dozen startups working for five months from April this year, is targeting companies that are working with, you guessed it, artificial intelligence and machine learning. Salesforce recently announced a raft of artificial intelligence features that have been added to its suite of products called Einstein.
Ulrich is also looking to bring in a more diverse and international cohort than the first, which was 100 percent North American. Applications will open towards the end of the year (follow @salesforcestart to stay up to date). He also refused to rule out the possibility of opening more incubators across different geographies.
Unlike Google's DeepMind, Salesforce isn't interested in research organisations. They want the intelligence to be baked into whatever the startup is building. In his fight against buzzwords Ulrich goes as far as to “challenge the founders to pitch their companies without using the word AI.”
Ulrich said that the type of startups he targets align with what Salesforce customers are asking for, and that "going to market now without any level of intelligence would be unexpected to say the least".
It seems that Salesforce isn’t done with their recent AI spending spree, and wants to continue to bring talent into the organisation. As the head of the Einstein project John Ball said during his Dreamforce keynote: “This is just the start of what Einstein can do.”
When it comes to investments, Salesforce Ventures is looking strictly for cloud enterprise software startups to "fit the gaps that our customers are identifying", Ulrich says. In other words: AI, IoT, ecommerce and analytics would be smart focus areas for startups looking to get into the Salesforce ecosystem.
Ulrich's old employer Microsoft set up a rival ventures arm back in May. Its first portfolio of investments also stretches across enterprise software, with focus areas around SaaS, cloud infrastructure, security, productivity, analytics and machine learning.
Ulrich is a realist with a venture capitalist mentality. He's aware that not all startups will be a home run: “If there is a company that doesn't have the calibre to be a VC backed company, but we can build a decent business selling to Salesforce companies on the App Exchange, then that is also success for us.”
Both CEO Marc Benioff and COO Keith Block went into detail on what Salesforce looks for in acquisition targets during this year's Dreamforce conference. It’s safe to consider these expectations as the macro picture to what Ulrich is doing on a more micro level within Salesforce.
During his questions and answer session with investors last week Benioff responded to the rumours that the company is preparing a bid for the social network Twitter by stating: “Number one is we look at a lot of companies, we look at a lot of things and pass on almost everything.
“I think our history and track record is better than anyone, not every deal has been perfect, but the vast majority of cases we either got great people, great technology or a great business and in best cases we get all three.”
Similarly, because Salesforce executives are nothing if they aren’t polished with their messaging, COO Keith Block told a Dreamforce press conference: “We look at a roster of companies and Marc and I have a steady dialogue about these things. We look at culture: will it be a cultural fit? Is it a good product fit? Is it amazing technology? Is there value? What are the risks in assimilating that company into ours?”
Benioff also wanted to be clear that he doesn’t value acquisition targets based on their proprietary data, an accusation that has been levelled at all the LinkedIn suitors. He said: “We liked that asset [LinkedIn] because of its deferred revenue. I wasn’t valuing that asset based on the data.”